The Market Regulation and Consumer Affairs (D) Committee had another successful year addressing ongoing “maintenance” efforts related to NAIC systems and publications and addressing current marketplace issues. This article provides a summary of the key accomplishments in 2024 and highlights a few items to expect in 2025.
Market Analysis and Market Conduct Annual Statement (MCAS)
With the adoption of the Pet Insurance Data Call and Definitions in 2023, companies writing pet insurance will be required to file 2024 pet insurance data in 2025. The pet insurance blank requests data regarding number of claims, speed of payment or denial, and key metrics regarding denied claims (preexisting condition exclusion, waiting period, maximum benefit limit, inadequate documentation, hereditary disorder exclusion, congenital anomaly exclusion and chronic condition exclusion). To facilitate the use and analysis of this data in 2025, the Market Analysis Procedures (D) Working Group adopted pet insurance MCAS ratios that will be publicly posted after each MCAS reporting period.
The Market Analysis Procedures (D) Working Group continues to review how states use the Market Analysis Prioritization Tool (MAPT) for their baseline market analysis and is developing recommendations on how to improve the MAPT. Coupled with these efforts, the Working Group continues to hold regulator-only educational lunch-and-learns for new and experienced analysts. During these sessions states have shared how they conduct MAPT analysis and how financial data is used in market analysis tools.
The last item to note regarding MCAS is that the Market Regulation & Consumer Affairs (D) Committee adopted the recommendation for fraternal organizations to report MCAS data.
Producer and Adjuster Licensing
The Producer Licensing (D) Task Force has completed its review of proposed revisions to the NAIC’s Uniform Producer Licensing Applications, which were adopted by the Producer Licensing Uniformity (D) Working Group in June. Coordinating with NAIC/NIPR staff on prioritization of this work, implementation of these amendments is estimated to require between 4,122 and 10,715 hours of work. This work is scheduled to begin in October of 2025. Development is expected to be completed by February 2026 and production implementation is scheduled between March and May 2026.
The Producer Licensing (D) Task Force is finalizing revisions to the NAIC Public Adjuster Licensing Model Act (#228) to strengthen regulatory standards governing the conduct of public adjusters for the following four issues: 1) individuals acting as unlicensed public adjusters; 2) contractors who are also acting as public adjusters on the same claim; 3) inappropriate assignment of benefit rights; and 4) excessive fees charged by public adjusters. One of the most significant revisions is a recommendation on compensation, which sets forth a 10% cap for a catastrophic insurance claim settlement, and no more than 15% for any insurance claim settlement. In addition, no public adjuster shall require, demand, or accept any fee, retainer, compensation, deposit, or other thing of value, prior to the settlement of a claim.
The federal Violent Crime Control and Law Enforcement Act of 1994, 18 U.S.C. § 1033, prohibits a person who has been convicted of a felony involving dishonesty or breach of trust from engaging in the business of insurance unless the person receives written consent or approval, known as a “1033 Waiver”, from the appropriate state insurance commissioner. The Producer Licensing (D) Task Force is concluding its work on a 1033 Wavier Template, which is being developed as a resource for voluntary state use. The Producer Licensing (D) Task Force’s current draft emphasizes the applicant’s “Home State” is the primary state to consider a 1033 Waiver unless an individual’s “Home State” does not issue 1033 Waivers. Another key issue being discussed is the definition of “conviction.” The current definition parallels the definition used in the NAIC Uniform Producer Licensing Applications: “This term includes but is not limited to, having been found guilty by verdict of a judge or jury, having entered a plea of guilty or nolo contendere or no contest, or having been given probation, a suspended sentence or a fine.”
Finally, the Producer Licensing Uniformity (D) Working Group continues to discuss what chapters of the NAIC State Licensing Handbook should be considered for revision. Additional work is contemplated in 2025.
Consumer Agent Broker Search
An NAIC State Connected project related to producer licensing is the development of a new, consumer-facing Consumer Agent Broker Search. The project’s stated goal for the NAIC is to implement a free service for consumers to determine if a person is licensed to sell insurance. Once implemented, consumers will be able to search for individuals using the individual’s first name, last name, city, and state. The Web based service will provide consumers with immediate verification on whether a person is licensed in a consumer’s state and the types of insurance products the individual is authorized to sell. The search tool is being designed to integrate existing information states already release to consumers. This Web based service is slated for deployment by the end of 2025.
Market Regulation Product Filing Handbook Updates
The Market Conduct Examination Guidelines (D) Working Group continues to develop a new chapter on conducting pet insurance examinations and a new standardized data request for pet insurance. In addition, updates are being developed to the examination standards for travel insurance. This work is guided by the NAIC Travel Insurance Model Act (Model # 632) and the Pet Insurance Model Act (Model # 633).
The Market Conduct Examination Guidelines (D) Working Group is developing revisions to the Conducting the Life and Annuity Examination chapter of the NAIC Market Regulation Handbook to correspond with the March 2023 adopted revisions to Actuarial Guideline XLIX-A—The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest to Policies Sold on or After December 14, 2020 (AG 49-A).
While work is slated to begin in the first quarter of 2025, the Accelerated Underwriting (A) Working Group completed its development of Regulatory Guidance regarding accelerated underwriting. The Working Group is now recommending the Market Conduct Examination Guidelines (D) Working Group utilize the Regulatory Guidance to update the NAIC Market Regulation Handbook. The Regulatory Guidance is designed to provide a framework for regulators to reference when reviewing insurers’ use of accelerated underwriting and is divided into three areas of focus: regulatory considerations; strategies for review; and requests for information.
While not recent work, the Market Regulation & Consumer Affairs (D) Committee adopted revisions to the NAIC Product Filing Review Handbook during the first quarter of this year. These revisions incorporate best practices for the regulatory review of predictive models, that were adopted by the Casualty Actuarial and Statistical (C) Task Force. Additional technical and style-related edits were also made to bring the NAIC Product Filing Review Handbook up to date and make it more useful for state insurance regulators and non-regulators.
Voluntary Market Regulation Certification
With the NAIC Membership’s adoption of the Voluntary Market Regulation Self Certification Program at the 2023 Fall National Meeting, the Working Group has spent 2024 working to implement the voluntary program. States were able to begin submitting their voluntary market regulation self-certification reports in 2024.
The program consists of eleven requirements an insurance department would be expected to achieve in the following areas: 1) department authority for market conduct analysis and examinations; 2) department ability to use the NAIC Market Regulation Handbook or other policies and procedures in place to conduct examinations; 3) department staffing – resources; 4) department staffing – qualifications; 5) confidentiality and information sharing; 6) collaboration with other jurisdictions; 7) collection of Market Conduct Annual Statement data; 8) data reporting to the NAIC; 9) participation in NAIC market analysis and market conduct working groups; 10) appointment of a Collaborative Action Designee; and 11) interdepartmental communications.
Market Actions (D) Working Group and Improper Marketing of Health Insurance (D) Working Group
The Market Actions (D) Working Group has a new charge to “facilitate interstate communication and coordinate collaborative state regulatory activities involving non-traditional market actions through a new Coordinated Market Investigation Subgroup.” The Improper Marketing of Health Insurance (D) Working Group continues to hold regulator-only calls regarding the improper marketing of health insurance plans and the activities of Health Insurance Lead Generators. The Working Group is also coordinating with the federal Centers for Medicare & Medicaid Services and the Senior Issues (B) Task Force regarding market issues involving network adequacy and formulary changes.
For anyone wanting additional information about the activities of the Market Regulation and Consumer Affairs (D) Committee, its Task Forces, and Working Groups, please visit the following Weblink on the NAIC Website: https://content.naic.org/cmte_d.htm.
Tim Mullen, JD, MBA, CPCU, CIE, MCM is the Director of Market Regulation at the National Association of Insurance Commissioners. He is a member of the Missouri Bar and the Kansas Bar, the 2009 recipient of the Paul L. DeAngelo Memorial Teaching Award from the IRES Foundation, and past president of the Kansas City CPCU Chapter.
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